AUGUSTA –– In the latest negotiations over the state budget, House Democrats offered to reduce the 3 percent tax surcharge on affluent Maine residents in exchange for higher sales and lodging taxes.

But the compromise was quickly denounced as “a travesty of democracy” by the Maine Education Association — normally a dependable Democratic ally — and House Republicans continued to push for tax cuts and a repeal of the 3 percent tax surcharge.

The latest machinations over the 3 percent tax hike on Mainers earning in excess of $200,000 highlight the political challenges facing lawmakers as they attempt to strike an as-yet-elusive budget deal before the end of the month. House Democrats touted their proposal as a way to achieve the elusive target of 55 percent state funding for public schools while scaling back the 3 percent tax surcharge that voters approved in November.

The House Democratic proposal would:

– Reduce the tax surcharge to 1.75 percent and apply it only to incomes above $300,000.

– Increase Maine’s sales tax from 5.5 percent to 5.75 percent.


– Increase the state lodging tax from 9 percent to 10 percent.

– Impose higher taxes on some tobacco products.

“By focusing our efforts on a full funding of education and property tax relief, Democrats are offering a budget that charts a path forward for a more prosperous Maine,” House Speaker Sara Gideon, D-Freeport, said in a statement. “I hope our Republican colleagues join us at the table and finally get serious about finalizing this budget.”

But the proposal ran into immediate opposition from the MEA and progressive groups that worked on the campaign to funnel more tax dollars to education.

MEA president Lois Kilby-Chesley dubbed the Democratic compromise “a travesty of democracy” and accused lawmakers of ignoring the will of Maine voters.

“We have to wonder on which part of ‘democracy’ do Legislators need a tutorial?” MEA President Lois Kilby-Chesley said in a statement. “Maine voters have told the Legislature (twice) to fund schools at 55%. The funding mechanism was made clear in November — 3% on income over $200,000.”


The liberal activist group the Maine People’s Alliance gave the Democratic proposal a similarly frosty reception.

“The House Democratic budget plan to raises sales taxes on all Mainers in order to give a new tax break to the wealthy is a betrayal of the people of Maine,” said MPA legislative director Taryn Hallweaver. “Maine voters spoke clearly against this kind of regressive tax shift in November and passed a law to fairly fund our schools.”

House Republicans want to set a new top tax rate of 6.99 percent on earnings above $100,000 while reducing income tax rates for all other Mainers earning more than $21,500. They also want to reduce the corporate income tax rate from 8.93 percent to 8.33 percent.

“Working Maine families should keep more of their money, not be forced to send it to Augusta to fund a bloated and out of control state government,” House Minority Leader Rep. Ken Fredette, R-Newport, said in a statement. We also recognize that we can’t treat our small businesses like a bottomless well of cash.”

Senate Republicans, meanwhile, offered last week to earmark an additional $100 million toward education while eliminating the 3 percent surcharge. Democrats have already rejected that offer because they say it falls $220 million short of the $320 million expected to be funneled to education from the surcharge and because they contend it will increase local property taxes.

“We appreciate the Democrats offering a counterproposal,” Senate President Mike Thibodeau, R-Winterport, said in a statement. “But it increases the tax burden on the people of Maine, and we have already demonstrated that we can fund education at 55 percent with existing resources and without raising taxes.”

Wednesday’s Democratic proposals as well as the Republican offers are all unlikely to become law but are the latest public positioning as they attempt to find common ground on a roughly $7 billion, two-year budget. Any budget will require the support of two-thirds of lawmakers in both the Republican-controlled Senate and the Democrat-controlled House, thereby necessitating a final proposal with bipartisan backing. Lawmakers would also need two-thirds majorities to override a likely veto from Gov. Paul LePage, a Republican.


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